USDA
=m
United States
Department of
Agriculture
Rural Development
Rural BusinessCooperative
Service
RBS Research
Report 156
Voting and
Representation
Svstems in
A&icultural
Cooperatives
Abstract
This report documents the extent of use of one-member, one-vote and proportional
voting systems in the U.S. by type and function, and membership size for direct-membership, federated, and mixed membership cooperatives. It also documents the extent
of use of at-large, geographic districting, and delegate systems, as well as combinations of at-large with districting and delegate systems by type and function and by
region. The report finds one-member, one-vote, and at-large systems predominate.
Keymnords; cooperatives, membership, voting, proportional representation,
governance.
Voting and Representation Systems
in Agricultural Cooperatives
RBS Research Report 156
Bruce J. Reynolds, Thomas W. Gray, Charles A. Kraenzle
Rural Business-Cooperative Service
June 1997
Price: Domestic $5.00; foreign $5.50
Preface
Fundamentally, a cooperative is its members. But this type of membership organization
must have the power to make decisions as a unified and single entity. Cooperatives follow democratic principles for determining and delegating the powers of governance
and decision-making authority. Members elect a board of directors to assume a dual
responsibility of representing member interests and executing fiduciary responsibilities
of control. Directors carry out these responsibilities primarily in periodic board meetings with management.
This report examines the two interrelated aspects of cooperative representation: 1)
determining voting power of individual members, and 2) determining how directors are
to be elected to cooperative boards.
Data for this study were collected from a survey of U.S. farmer cooperatives that use
various voting and representation systems. These data were sorted by region, type or
function, membership size, and by organizational structure, i.e, direct membership, federated, and mixed membership cooperatives.
Specifically, the survey was developed to measure the prevalence of: 1) voting power
either as one-member, one-vote or as proportional voting systems, and 2) director
election methods, as based in at-large, geographic districting, and delegate systems,
or some combination of these alternatives.
Data were collected in Cooperative Services’ 1995 annual survey of farmer cooperatives. About 74 percent of U.S. farmer cooperatives were asked to provide information
on their voting/representation systems.
Contents
HIGHLIGHTS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
................................................... .I
INTRODUCTION
Individual Voting Power ............................................ 1
Delegation and Representation
..................................... 1
Survey Design and Response
..................................... .2
DIRECT-MEMBERSHIP COOPERATIVES ................................ .3
Voting Method
..................................................
Representation Systems
.
......................................... .4
FEDERATED AND MIXED COOPERATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Voting Method
..................................................
Representation Systems
......................................... .8
SUMMARY AND CONCLUSIONS
......................................
APPENDIX - STATE STATUTES AND LAWS
GLOSSARY
REFERENCES
ii
.
.9
.............................. 11
.....................................................
..ll
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...12
A survey of voting methods for electing members to boards of directors of cooperatives
was conducted in 1995. Results are reported separately for 1,340 direct-membership
cooperatives and 63 federated and mixed organizational structure cooperatives.
Respondents indicated whether their election procedures were by one-member, onevote or by proportional voting. Respondents were also asked to indicate their method
of defining elected representation from a list with five different ways: at-large, districts,
delegates, at-large and districts, and lastly, at-large and delegates.
Survey results are reported by cooperative type or function, by membership size intervals, and some results are reported for geographic locations.
Direct-Membership Cooperatives:
Direct-membership cooperatives are organized so farmers or ranchers, as producers,
make up the membership of the organization. A survey of cooperatives provided the
following:
l
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Ninety-three percent of all direct-membership cooperatives used one-member, onevote methods, while the remaining 7 percent used proportional voting methods.
Several States have, or had, statutes or corporate laws that require a one-member,
one-vote system for organizations to incorporate as cooperatives. Therefore, the
comparative frequency in which either voting method is used is influenced, and in
many States, determined by these statutes. Some of the survey results are grouped
and reported for States with statutes that do not require one-member, one-vote.
The one-member, one-vote method was used in the greatest percentage by directmembership cooperatives in the Great Plains.
Proportional voting was used in the greatest percentages by direct-membership
cooperatives in Illinois and California.
Cotton and dairy cooperatives used the one-member,one-vote method in the greatest percentage.
Fruit and vegetable and nut cooperatives used proportional voting in the greatest
percentages.
Direct-membership cooperatives with proportional voting have slightly smaller membership sizes than those that use one-member, one-vote systems. However, this pattern was not evident among the largest sized cooperatives.
Sixty-six percent of all direct-membership cooperatives used at-large elections of
cooperative directors.
Twenty-three percent of all direct-membership cooperatives used geographic districting for apportioning elected seats to their boards of directors.
Northeast and Great Plains cooperatives elected directors at-large in the greatest
percentages. Intermountain, North Central, and Pacific region cooperatives used atlarge methods in the smallest percentages.
...
ill
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Pacific and North Central region cooperatives used geographic districting in the
greatest percentages. Great Plains and Southeast cooperatives used geographic
districting in the smallest percentages.
At-large elections predominated among localized and relatively small membership
cooperatives. Cotton ginning cooperatives used at-large methods in the greatest percentages.
Geographic districting, delegate systems, and combined at-large districting and atlarge and delegate systems were mostly used in large-membership cooperatives.
Combined at-large and geographic districting systems were used more frequently
than delegate and combined at-large/delegate systems.
Federated and Mixed-Membership Cooperatives:
Federated cooperatives are organized to have only other cooperatives as members.
Mixed-membership cooperatives have both cooperative organizations and individual
farmers as members. A survey of cooperatives showed:
l
Twenty-seven of 31 federated cooperatives use one-member, one-vote.
l
Twenty-four of 29 mixed cooperatives use one-member, one-vote.
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Fifty-one of 61 federated and mixed cooperatives use one-member, one-vote.
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Nine of 25 federated cooperatives exclusively hold at-large elections, while 16 use
some form of district or unit apportionment.
Of the 21 mixed cooperatives, 9 exclusively have at-large elections, and 9 use exclusively geographic districts.
Voting and Representation Systems
in Agricultural Cooperatives
Bruce J. Reynolds, Thomas W. Gray, Charles A. Kraenzle
(USDA, RBS-Cooperative Services)
Introduction
The operations and services of agricultural cooperatives are similar to those of many businesses, but cooperatives are distinctive in being owned and controlled
.by their members. All formal power within cooperatives derives from the membership body, and not from
individual members, elected officers, hired management, or employees. While the distribution of this
power may get skewed in various ways, fundamentally the cooperative is the membership body. (Ginder
and Dieter, 1989; and Craig, 1993.)
Cooperative governance is created by a democratic system of representation. It involves two interrelated
components: 1) member voting for directors to a limited number of seats on a governing board, and 2) defining the representation relationship of each elected
director to the membership. These two aspects of
democratic representation are conducted by cooperatives in different ways. Most cooperatives establish ’
voting power on a one-member, one-vote basis. The
alternative method is proportional voting, where
members are granted votes according to the number of
their patronage equity shares.
Cooperatives also use different methods of determining the representation relationship for electing
members to seats on the board. The major methods are
election of directors at-large, by geographic districts,
by district delegates, or by some combination of these
techniques.
Individual Voting Power
Cooperatives must determine the amount of voting power to be vested in each member. This power
can either be distributed on an equal basis as onemember, one-vote, or allocated to members on a proportional basis.
In proportional voting systems, each member has
at least one vote, but can accumulate additional voting
power, often carried to fractional values, in proportion
to patronage volume or patronage-generated equity, or
invested shares of stock in the cooperative. Some organiza tions limit voting power to a specific number of
votes per member, but all members have at least one
vote.
Rationales for these two voting methods vary, and
have been a subject of debate for decades. A few are
mentioned.
The accepted practice of democratic government
in the United States is for each citizen to have an equal
vote in elections for political representation.
Cooperatives have traditionally subscribed to this
equality norm by electing directors on the basis of onemember, one-vote. The overriding idea is that all members cooperate as equals and are governing their organizations on a consensus basis.
Advocates of proportional voting understand fairness and equity p in terms of use of the organization. For
these members, it is understood that those using the
organization in the greatest volumes should also have
the greatest governing control. The more a producermember uses the organization, the more votes he or
she should have in its governance. This logic may be
most frequently used where the volume of products
marketed or services used are highly concentrated in a
numerical minority of members.
Delegation and Representation
In cooperati .ves with small memberships, decision -making can potentia lly be made in a town-meeting type of forum. However, the practicality of such
forums is quickly limited by membership size and
complexity in decision-making. The larger the membership body, the slower and more limited the number
of decisions that can be made in a reasonable period of
time (How long members will remain meaningfully
active at a meeting?) Power to make decisions must be
delegated to a governing body, su.ch as the board of
directors. The extent of and limits to this power are
generally specified in cooperative bylaws and other
legal instruments. Some cooperatives require member1
ship to ratify major decisions. When major proposals
are supported by only a slight majority of directors,
decisions are then frequently made by taking a membership vote.
When the membership elects directors to the
board, they delegate power to them to make decisions
in the interest of the collective group. When an individual member casts his or her vote, he or she agrees
to abide by the election outcome. Decision-making
power is shifted from the membership body to the
board. An election lends legitimacy to this shift or delegation of power.
Individual members have varying degrees of
access to the process of nominating and electing members to the board. The different methods of nomination
that can be used were not covered in the survey.
Nominating committees are frequently organized
along the same avenues as the election of directors.
The survey, however, did cover the three major
avenues of election.
1) Electing directors by geographic districts:
Some cooperatives, particularly those with large numbers of members, divide their membership into geographic districts. Members in these districts elect directors to represent them on the board. In general,
members vote only for directors nominated from their
respective districts. Directors are typically elected at
annual district meetings.
2) Electing directors at-large:
Other cooperatives may elect directors on an “at-large”
basis. A board is elected at an annual meeting from,
and by, the entire membership, regardless of districts
or geographic locations. Cooperatives that use geographic districting may designate one or two seats on
the board to be elected at-large.
3) Electing directors by delegates:
Still other cooperatives provide for the election of
directors by delegates. Individual members elect delegates from geographic districts, rather than directly
electing directors to the board. These delegates are typically elected at respective annual district meetings.
Delegates, acting for the entire membership body, elect
a board of directors at an annual meeting.
A small number of case studies have been done
on governance structures. (Schomisch and Mirowsky,
1981; Butler, 1988; Gray, 1988; Gray and Butler, 1991;
and 1995.) A survey of voting by cooperatives was conducted for a study in 1979. (Ward, Schneider, and Lopez,
1979.)
2
These works outline the different structures of representation within the United States, but no previous studies have been made of the prevalence of these options.
This report samples for the prevalence of these representation options within the United States by region, cooperative type or function, and membership size.
Survey Design and Response
Data for the study were collected using
Cooperative Services’ annual survey of farmer cooperatives. Two questions were asked about voting methods. The first question asked if the cooperative used
one-member, one-vote or proportional voting in its
member-voting methods. The second asked if directors
were elected at-large, by geographic districts and/or
divisions, or by district delegates.
The questionnaire requested voting information
related to the operation of each cooperative during fiscal 1995. Results are reported for respondents from
direct membership, federated, and mixed-structure
agricultural cooperatives. Direct-membership cooperatives are organized so that farmers or ranchers, as producers, make up the membership of the organization.
Federated cooperatives have other cooperatives as
their members. Mixed agricultural cooperatives have
both cooperatives and individual farmers as members.
Table I- Number of cooperatives surveyed and
response to questions on voting, 1995
Number of Cooperatives
Cooperative type
or function
Surveyed
a__-_
Cotton
Dairy
Fruit and vegetable
Grain and oilseed 3
Livestock
Poultry 4
Nut
Other marketing 5
Farm supply
Cotton gin
Other service
Total
’
Responded 2 Response rate
Number-----
Percent
15
12
80.0
174
84
48.3
283
95
33.6
928
447
48.2
77
24
31.2
17
10
58.8
19
10
52.6
85
33
38.8
1,118
568
50.8
145
68
46.9
88
52
59.1
2,949
1,403
47.6
Number of cooperatives queried about voting and representation
methods.
Used either one-member, one-vote or proportional voting.
Excludes cottonseed.
Includes poultry, eggs, turkeys, squab, and ratite cooperatives.
Includes dry bean, rice, sugar, fish, wool, and miscellaneous
marketing cooperatives.
About 74 percent (or 2,949) of U.S. farmer cooperatives were asked to provide information on their voting methods and about half responded. The remaining
26 percent - fishery, wool and mohair, tobacco, and
other selected cooperatives - were polled but not on
the voting issue.
Response rates by cooperative type or function
are reported in table 1. Questionnaires were sent to
1,118 farm supply cooperatives, the largest type to be
surveyed, of which 568 or 51 percent responded. Grain
and oilseed cooperatives (grain) were the second
largest group (928) surveyed. More than 48 percent or
447 provided information.
Direct-Membership Cooperatives
Voting Method
Some State statutes for cooperative incorporation
require a one-member, one-vote system. Some of the
effects of State statutes and securities laws on voting
methods are discussed in the Appendix.
The overall results of the survey show the prevalence of the two methods of voting. However, to compare preferences between one-member, one-vote versus proportional voting, a data set for States that allow
both methods of voting is provided.
accurate indication of proportional voting frequency
than the nearly 20 percent when Illinois is included. It
is also relatively close to the nationwide result of 6.8
percent reporting use of proportional voting (table 2).
Cooperatives by Type or Function:
Circumstances that prompt a departure from onemember, one-vote procedures may be related to the
type of cooperative. These results and all subsequent
reporting for direct-membership cooperatives are
based on responses from 1,340 cooperatives. Of the
1,340 direct-membership cooperatives responding to
the survey, 1,249 or 93.2 percent use a one-member,
one-vote election method. The remaining 6.8 percent
(91) used proportional voting. A survey in 1978 reported similar results. (Ward, et al, 1979.)
Fruit and vegetable and nut cooperatives used
proportional voting more than other types of cooperatives (table 3). Of the 88 reporting fruit and vegetable.
cooperatives, 22 of them or 25 percent, used proportional voting, as did 3 of 10 reporting nut cooperatives.
method of direct-membership
cooperatives by States with statutes allowing both
one-member, one-vote and proportional voting
Table 2-Voting
State
Comparison Set of Direct-Member Cooperatives:
By excluding States that require incorporation as onemember, one-vote from the data set, the percentage of
direct-membership cooperatives using proportional
voting is much higher than the nationwide aggregate.
A comparison set of 18 States provides 439 responses-353 used one-member, one-vote, and 86 used proportional voting (table 2).
In the formation of most cooperatives, a onemember, one-vote system is the traditional assumption. Where both voting methods have been permitted,
the survey results show nearly 20 percent use proportional voting. However, these results do not adequately indicate a preference for proportional voting. In the
set of 18 States with both methods of voting permitted,
9 States had no cooperatives reporting use of proportional voting. Furthermore, 54 of the 87 cooperatives
reporting proportional voting are from Illinois.
The relatively high incidence of proportional voting in Illinois reflects a historical background of specific regulations (see Appendix). By removing Illinois
from the comparison, proportional voting is 9.1 percent of the total. Where both voting methods are
allowed in State statutes,
the 9 percent figure is a more
\
One-member, Proportional Total
One-vote
voting
Proportional
method
Percent
Alabama
Arizona
California
Florida
Hawaii
Illinois
Indiana
Maine
Massachusetts
Michigan
Nebraska
New Jersey
New Mexico
New York
Ohio
Oregon
Vermont
Washington
Total
Without Illinois
All States
15
3
50
11
6
33
26
3
5
22
66
10
2
22
35
13
2
29
353
320
1,249
1
3
1
1
4
1
86
32
91
15
3
69
13
6
87
26
3
6
25
67
10
2
23
35
17
2
30
439
352
1,340
62.1
16.7
12.0
1.5
23;5
3.3
19.6
9.1
6.8
- = None responded.
3
Grain cooperatives, 41 of 442 or 9 percent, were the
most numerous users of proportional voting and all 41
were in Illinois.
The other groupings of cooperatives by type predominantly used the one-member, one-vote method
(table 3). Only 1 of 74 dairy cooperatives reporting
used proportional voting, as did only 16 of 550 farm
supply cooperatives. If Illinois cooperatives are
excluded, less than 1 percent of farm supply cooperatives used proportional voting. However, use of proportional voting is significant among California fruit,
vegetable, and nut cooperatives.
Cooperative size (membership) does not appear to
influence voting method. Table 4 shows seven intervals
of membership size for 1,340 direct-membership cooperatives, including a separate column for the 91 cooperatives with proportional voting. All seven intervals
reported at least one cooperative using proportional
voting. Because the number of cooperatives in each
interval varies widely, proportional voting is also
reported as a percent of each interval.
Summary:
Of the 1,340 direct-membership cooperatives in the
study, 93 percent used a one-member, one-vote election method. It is used by a majority of cooperatives in
all States except Illinois.
When considering only States with incorporation
statutes that allow both voting methods and do not
restrict the adoption of either method, the frequency of
proportional voting is only slightly higher than the
national results. So, even given a choice, most cooperatives favor the one-member, one-vote system.
Proportional voting was used most by the fruit,
vegetable, and nut cooperatives operating in
California, or by local grain and farm supply cooperatives in Illinois. Membership size does not appear to
influence decisions about choice of voting methods.
Representation Systems
Of the 1,268 direct-membership cooperatives that
responded to survey questions on representation, 832
or 65.6 percent exclusively used at-large election methods for choosing directors (table 5). Elections based on
Percent of direct-membership cooperatives
using proportional voting, grouped by membership
size intervals, 1995
Table E
Membership
size intervals
co-ops
Proportional
Voting
~*~~~~~er__Less than 100
100-249
250-499
500-999
1 ,ooo-2,499
2,500.4,999
5,000 or more
Total
Percent
of interval
Percent
185
208
317
307
229
60
34
17
17
13
17
19
7
1
9.2
8.2
4.1
5.5
8.3
11.7
2.9
1,340
91
6.8
Table ~-Voting methods used by direct-membership cooperatives, by type, 1995
Direct-Membership
Cooperative
type/ function
Cotton
Dairy
Fruit and vegetable
Grain and oilseed 2
Livestock
Poultry 3
Nut
Other marketing 4
Farm supply
Cotton gin
Other service
Total
1
2
3
4
4
One-member,
one vote
Proportional
voting
Number
Percent 1
5
73
66
401
22
10
7
29
534
63
39
100.0
98.6
75.0
90.7
95.7
100.0
70.0
90.6
96.7
96.9
95.1
1,249
93.2
Percent of cooperatives in each type using the voting method.
Excludes cottonseed.
Includes cooperatives marketing poultry and eggs, turkey, squab, and ratite.
Includes dry bean, rice, sugar, and miscellaneous marketing cooperatives.
Number
Total
Percent 1
Number
1
22
41
1
i.4
25.0
9.3
4.3
3
3
16
2
2
30.0
9.4
3.3
3.1
4.9
5
74
88
442
23
10
10
32
550
65
41
91
6.8
1,340
geographic districts were reported by 286 or 22.6 percent. Only 22 cooperatives or 1.7 percent used a delegate system. Nearly 10 percent (122) used some combination of geographic districts and at-large elections.
Only six cooperatives used some combination of atlarge and district delegates for electing directors.
Representation Systems by Membership Size:
Table 5 compares the frequency of responses for different representation systems by seven intervals or classifications of membership size. More than half are in the
smallest three intervals of membership size. In the two
largest intervals, covering all responses by cooperatives having at least 2,500 members, there were only 83
cooperatives out of 1,268.
Although most respondents used at-large representation, an increasing number used districting and
delegate systems with large memberships.
Across Representation Systems:
In the first four ranges of membership size, a majority
used the at-large representation (table 5). The greatest
percentage was in the smallest membership range.
With each larger membership size interval, the percent
of cooperatives that used at-large representation rapidly declines until leveling off at about 30 percent in the
largest two membership groupings.
Geographic district systems were more prevalent
in the middle range of membership size (500.999),
reaching 28.1 percent. It is the most frequent method
used in the largest two intervals. Representation systems that combine at-large and geographic districts or
service divisions also become relatively more prevalent
in terms of the percent share of the membership size
intervals from the middle to the largest. In the 2,500 to
4,999 range, 13 of 57 cooperatives (22.8 percent) used a
combination of at-large and districts or divisions.
Relatively few respondents used delegate systems
in all membership size intervals. Results show there is
also relatively less inclusion of at-large seats in district
delegate systems than in those using geographic districts or divisions for member voting.
Within Representation Systems:
Table 6 focuses on the membership size distribution
within each system. Cumulative percentages are given
by size intervals for each system.
There were 832 respondents exclusively using atlarge elections. Nearly 65 percent were in the smallest
three membership-size intervals. The four systems of
districting are mostly used by cooperatives with large
memberships. But it is noteworthy that several cooperatives with small memberships make use of representation systems with districts or divisions or delegate voting. These results suggest that some cooperatives define
their representation system with districts, not only
when having large memberships, but also for providing
a local focus when their members are widely dispersed.
Type or Function:
Table 7 classifies the 1,268 direct membership cooperatives by 9 different types or functions. In all categories, at-large representation was most prevalent
(65.6 percent).
TM~ 5- Distribution of membership size across representation systems of direct-membership co-ops, 1995
Representation:
Membership
At-large
No.
BY
geographic
districts1
%
No.
%
Less than 100
loo-249
250-499
500-999
1 ,OOO-2,499
2,500.4,999
5,000 or more
142
162
234
176
93
17
8
87.1
81.0
75.5
59.7
42.9
29.8
30.8
14
20
52
83
82
24
11
8.6
10.0
16.8
28.1
37.8
42.1
42.3
Total
832
65.6 286
22.6
BY
district
delegates
No.
22
At-large &
geographic
districts1
At-large &
district
delegates
%
No.
%
No.
0.6
1.5
1 .o
1.4
2.3
3.5
15.4
6
15
19
31
35
13
3
3.7
7.5
6.1
10.5
16.1
22.8
11.5
-
1.7
122
9.5
%
2
1
2
1
0.6
0.3
0.9
1.8
6
0.5
Total 2
No.
%
163
100.0
200
100.0
310
100.0
295
100.0
217
100.0
57 100.0
26
100.0
1,268
100.0
l And/or divisions.
2 Excludes 45 cooperatives that reported voting method used but not representation and another 20 cooperatives that reported representation
by both geographic and district delegates. Totals may not add to 100 percent due to rounding.
5
Table 7 reports the frequency and percentage of
total respondents for each of the five systems of representation. These percentages are useful for comparing
with those of the nine cooperative types or functions
reported for the five different categories of representation systems.
Table 6-
Sixty-five percent of dairy cooperatives used atlarge representation, or about the same as the 66 percent for the total sample. Among the five categories of
representation, 30 percent used geographic districts.
Seventy-one percent of fruit and vegetable cooperatives used at-large representation, slightly higher
Distribution of membership size within representation systems of direct-membership co-ops, 1995
Representation:
Membership
Less than 100
BY
geographic
districts’
At-large
NO.
%”
142
17.1
14
No.
%2
No.
5.2
1
At-large &
district
delegates
At-large &
geographic
districts’
BY
district
delegates
No.
%2
No.
%2
4.6
6
4.9
-
-
s/o2
100-249
162
36.5
20
12.1
3
18.1
15
17.2
-
-
250-499
235
64.8
52
30.1
3
31.7
19
32.5
2
33.3
500-999
176
85.8
83
59.5
4
50.0
31
57.7
1
50.0
1 ,ooo-2,499
93
97.0
82
87.9
5
72.6
35
87.0
2
83.3
2,500.4,999
17
99.0
24
96.2
2
81.7
13
97.6
1
100.0
8
100.0
11
100.0
4
100.0
3
100.0
-
-
5,000 or more
Total 3
832
286
22
122
6
l And/or divisions.
* Cumulative percentages.
3 Excludes 45 cooperatives that reported voting method used but not representation and another 20 cooperatives that reported representation
by both geographic and district delegates.
Table 7-
Representation used by direct-membership cooperatives, by type, 1995
Representation:
Cooperative
type/function
BY
geographic
districts’
At-large
At-large &
geographic
districts1
BY
district
delegates
No.
%
No.
%
No.
Dairy
43
65.2
20
30.3
1
1.5
Fruit and vegetable
54
71 .I
13
17.1
1
1.3
274
63.9
104
24.2
6
1.4
13
65.0
3
15.0
3
15.0
6
60.0
2
20.0
-
-
Grain and oilseed
Livestock
Poultry
Other marketing 3
Farm supply
%
No.
At-large &
district
delegates
Total *
No.
%
No,
%
1
1.5
1
1.5
66
8
10.5
-
-
76
42
9.8
3
0.7
1
5.0
-
-
20
2
20.0
-
-
IO
429
17
41.5
15
36.6
3
7.3
5
12.2
1
2.4
41
346
65.2
119
22.4
6
1.1
59
11.1
1
0.2
531
Cotton gin
57
93.4
2
3.3
-
-
2
3.3
-
-
61
Other service
22
64.7
8
23.5
2
5.9
2
5.9
-
-
34
832
65.6
286
22.6
22
1.7
122
9.6
6
0.5
Total
1
2
3
6
1,268
And/or divisions.
Excludes 45 cooperatives that reported voting method used but not representation and another 20 cooperatives that reported representation
by both geographic and district delegates. Totals may not add to 100 percent due to rounding.
Includes cotton, dry bean and pea, rice, sugar, nut, and miscellaneous marketing cooperatives.
than the total sample. The 17.1 percent of total fruit
and vegetable cooperatives using geographic districts
was below the 22.6 percent for all cooperatives in the
sample.
The 429 grain cooperatives used all five representation systems at about the same rate as the total same
pl .
Among 20 livestock cooperatives, (15 percent),
used geographic districts, well below the 22.6 percent
reported for all cooperatives in the sample. Livestock
cooperatives had the greatest percentage use of district
delegates. Two of the 10 responding poultry cooperatives used geographic districts and none used district
delegates.
Among the 531 farm supply cooperatives, 346 or
65 percent used at-large representation, about the same
as the total sample. All five systems of representation
are used by this type of cooperative.
At-large representation was used by 57 of 61 cotton gin cooperatives, or 93.4 percent.
Cooperatives by Region:
Table 8 compares how cooperatives in different regions
of the Nation establish systems for representation on
governing boards. Although cooperative State statutes
vary in their membership voting requirements, there
are no comparable restrictions to influence the frequencies of cooperatives’ use of the five different systems of representation.
Among regions, use of the at-large system is the
most common at 66 percent and geographic districts
are the next most widely reported method at 23 percent of the total sample.
Observations from the North Central and the
Great Plains regions were more than 71 percent of the
total. This condition, coupled with the relatively small
number of cooperatives that reported other than atlarge systems, resulted in no observations in some
regions for representation systems that combine atlarge with districting methods. The lack of observations in these cases does not mean that these representation systems are not used by cooperatives in those
regions.
Half of the 22 responses for the district delegates
system are in the North Central region. Five of the six
systems that combine at-large with district delegates
are in the Great Plains region. Among the regional differences in table 8 is a relatively high percentage of atlarge representation use by Northeast cooperatives.
The Intermountain region had a relatively high percentage of cooperatives combining at-large and geographic district representation.
-
Table &- Representation used by direct-membership cooperatives, by region, 1995
-
Representation:
Region’
BY
geographic
districts*
At-large
BY
district
delegates
No.
%
No.
%
No.
%
Pacific
68
61.8
29
26.4
2
Intermountain
39
60.0
14
21.5
Great Plains
276
71.7
67
17.4
Southeast
North Central
Northeast
Total
At-large 81
geographic
districts*
At-large &
district
delegates
No.
%
No.
1.8
11
10.0
1
1.5
11
4
1 .o
Total 3
%
No.
-
-
110
16.9
-
-
65
33
8.6
5
1.3
11.2
-
-
134
10.0
1
0.2
519
90
67.2
27
20.1
2
1.5
15
317
61 .l
138
26.6
11
2.1
52
42
76.4
11
20.0
2
3.6
832
65.6
286
22.6
22
1.7
122
9.6
6
0.5
385
55
1,268
States included in each region:
Pacific - CA, OR, WA, AK, and HI.
Intermountain -AZ, NM, CO, UT, NV, ID, WY, and MT.
Great Plains - ND, SD, NE, KS, OK, and TX.
Southeast - AR, LA, MS, AL, GA, FL, SC, NC, TN, KY, VA, and WV.
North Central - MN, IA, MO, IL, WI, IN, OH, and Ml.
Northeast - MD, DC, DE, PA, NY, NJ, CT, RI, MA, VT, NH, and ME.
And/or divisions.
Excludes 45 cooperatives that reported voting method used but not representation and another 20 cooperatives that reported representation
by both geographic and district delegates. Totals may not add to 100 percent due to rounding.
7
Summary:
Of the five systems of representation for electing directors, the at-large alternative was the most frequently
used (66 percent), followed by geographic districting,
(almost 23 percent). Ten percent used some combination of districting with at-large representation methods. Only 22 cooperatives, or 1.7 percent, used a delegate system. Only six cooperatives, or 0.5 percent,
combined district delegates with an at-large representation system.
Larger cooperatives tended to make the most use
of districting, delegates, or some combination that
included at-large methods. Some relatively small-membership cooperatives also used districting methods for
defining their systems of member representation.
By cooperative type or function, about 66 percent
used at-large methods (93.4 percent among cotton ginning cooperatives). Dairy cooperatives used geographic districts in the highest percent. More than 71 percent
of survey respondents to representation questions
were from the North Central and Great Plains regions.
Federated and Mixed-Membership
Cooperatives
Thirty-two federated and 31 mixed-organizational-structure cooperatives responded to questions on
voting and representation. Two mixed-membership
cooperatives are excluded from the tabulations
because they used both one-member, one-vote and
proportional voting.
Voting Method
The frequency of one-member, one-vote and proportional voting are reported separately for federated
and mixed cooperatives and combined in subtotals
(table 9). One-member, one-vote was used by 51 federated and mixed cooperatives, while 10 used proportional voting. Twenty-seven of the 32 federated cooperatives and 24 of 29 mixed cooperatives used the
one-member, one-vote method. Eighteen out of 61
cooperatives with federated or mixed structures were
in farm supply.
Table 10 presents the voting methods of federated
and mixed cooperatives by region. With fewer federated and mixed cooperatives than the direct membership
cooperatives, the differences in State statutes do not
distort results. Several statutes allow cooperatives with
organizations as members to have proportional voting.
Twenty-seven of the 61 total federated and mixed
cooperatives reporting were in the North Central
region (table 10). Twenty-two North Central cooperatives used one-member, one-vote and five used proportional voting. All 14 federated and mixed cooperatives in the Great Plains region used one-member,
one-v0 te.
Representation Systems
Federated and mixed cooperatives use the same
types of representation systems as direct-membership
cooperatives- exclusive at-large, two kinds of districting, and two kinds of combined representation systems.
Table 9- Federated and mixed cooperatives using one-member, one-vote or proportional voting by type, 1995
Proportional Voting
One-Member, One-Vote
Type of cooperative
Total
Federated
Mixed l
Subtotal
Cotton
Dairy
7
Fruit and vegetable
Grain and oilseed
Livestock
Miscellaneous marketing
Farm supply
Cotton gin
Other service
4
4
1
1
14
3
9
Total
Mixed l
Subtotal
7
9
a
27
24
51
l Excludes two mixed cooperatives that use both voting systems.
8
Federated
7
4
1
1
18
3
11
5
5
10
61
Federated Cooperatives:
Table 11 reports the representation method for 25 federated cooperatives by commodity or industry type.
Thirteen used geographic districting for determining
representation in director elections, while 9 used atlarge methods.
Mixed-Membership Cooperatives:
Table 12 reports the representation method for 21
mixed cooperatives by commodity or industry type.
Nine each used either at-large representation or a geographic districting system.
Summary and Cc$nclusions
Direct-Membership Cooperatives:
The predominant choice for voting in direct-membership cooperatives is one-member, one-vote, regardless
of commodity, region, or membership size.
Statutes for cooperative incorporation have
required one-member, one-vote in several States.
Although a few States have recently changed their
statutes to allow proportional voting, about half have
had these regulations for many years. They have
helped reenforce the predominance of one-member,
one-vote systems. However, in States with statutes that
have permitted both methods, proportional voting is 9
percent, only slightly higher than the overall average
of 7 percent.
Proportional voting is most widely practiced in
the Pacific region among fruit and vegetable cooperaTable
IO-
tives, and among most of the local grain and farm supply cooperatives in Illinois, due to that State’s security
laws and incorporation statutes.
The most frequently used method for defining
elected representation, regardless of region or commodity type, is with at-large election methods.
Geographic districting is the second most frequently
used. As membership size increases, cooperatives are
more likely to use either geographic districting, a delegate system, or some combination. Cooperatives in the
Northeast and Great Plains had the highest percentage
use of at-large methods. Pacific region cooperatives
had the highest percentage use of geographic districting. By type or function, cotton ginning cooperatives
had the highest use of at-large methods.
Of the three remaining options for determining
representation for director elections, the most frequently used method was the combination of at-large
with districting. Dairy cooperatives used this method
in the smallest percentages, the miscellaneous marketing cooperatives in the largest percentages. By region,
Intermountain cooperatives had the highest percentage use of this method, while organizations in the
Great Plains reported the lowest use.
Relatively few cooperatives used a delegate system, either in combination with at-large representation
or exclusively with delegates. The largest number of
cooperatives using a delegate system were in the
North Central region. The largest number using atlarge with a delegate system were in the Great Plains.
By type, farm supply and grain cooperatives had the
Federated and mixed cooperatives using one-member, one-vote or proportional voting by region, 1995
One-Member, One-Vote
Proportional Voting
Type of cooperative
Total
Federated
Mixed ’
Subtotal
Pacific
Intermountain
Great Plains
Southeast
North Central.
Northeast
2
1
10
1
11
2
1
1
4
4
11
3
3
2
14
5
22
5
Total
27
24
51
Mixed 1
Subtotal
3
1
3
1
5
1
-
1
5
5
5
10
Federated
6
3
14
6
27
5
61
l States included in each region: Pacific - CA, OR, WA, AK, & HI
Intetmountain - AZ, NM, CO, UT, NV, ID, WY, & MT
G reat Plains - ND, SD, NE, KS, OK, & TX
Southeast - AR, LA, MS, AL, GA, FL, SC, NC, TN, KY, VA, & WV
North Central - MN, IA, MO, IL, WI, IN, OH, Ml
Northeast - MD, DC, DE, PA, NY, NJ, CT, RI, MA, VT, NH, & ME
9
highest percentage use of a delegate system, though
grain cooperatives often combined at-large with a delegate system.
Federated and Mixed Membership:
One-member, one-vote was the predominant voting
system used among the federated and mixed- structure cooperatives (51 of 61). Geographic district representation was used by 22 of these cooperatives, while
18 organizations used at-large representation.
Most U.S. agricultural cooperatives prefer to have
equal voting power among individual members-nemember, one-vote. The most frequently used method
for defining representation was elections at-large. As
cooperative membership size increases, there is a
strong tendency to shift away from at-large techniques,
in favor of geographic districting, delegate systems, or
some combination of methods. This tendency generally
holds across regions and commodities, although federated cooperatives used districting more frequently than
at-large methods, mixed membership cooperatives
used at-large and districting techniques equally often.
Table I I- Representation used by federated cooperatives, by type, 1995
1
Representation:
Type of cooperative
At-large
BY
geographic
districts 2
BY
At-large &
geographic
districts 2
district
delegates
At-large &
district
delegates
Total
Number
Cotton
Dairy
Fruit and vegetable
Grain and oilseed
Miscellaneous marketing
Farm supply
Cotton gin
Other service
Total
1
3
a
2
1
1
1
-
2
1
1
1
7
2
I
9
13
I
1
7
1
25
At-large &
district
delegates
Total
l Seven cooperatives that provided information on voting method used did not report on representation.
2 And/or divisions.
Table 12-
Representation used by mixed cooperatives, by type, 1995
Representation:
Type of cooperative
At-large
BY
BY
geographic
districts 1
district
delegates
At-large &
geographic
districts 1
Number
Cotton
1
1
4
1
5
Fruit and vegetable
1
2
1
4
Grain and oilseed
Livestock and poultry
Farm supply
1
1
Dairy
-
Cotton gin
5
1
Total
9
1 And/or divisions.
10
1
9
2
2
-
1
1
-
6
1
1
2
0
21
_
Appendix
Glossary
State Statutes and Laws
1. At-large voting system-When a representative is
elected by the entire membership.
2 . Delegate system-Delegates are officers, intermediate to members and directors, who act as agents for
members in cooperative decision-making. They typically act in place of the members, as a delegate
body at delegate meetings. Powers generally always
include electing the cooperative board of directors
and approving financial statements, but may also
include election of other officers, proposing and
approving governing resolutions, as well as bylaw
changes. Delegate systems are generally combined
with a districting system. Delegates represent members from respective districts, and serve in the interest of cooperative representativeness.
3) Direct-membership cooperatives-Agricultural
cooperatives organized so only farmers or ranchers,
as producers, are the members.
4) District system-Member representation by directors is defined by geographic regions.
5) Federated cooperatives-Agricultural cooperatives
organized so only other cooperatives make-up the
membersh iP of the organization.
6) Geographic-district, election system-District divisions across a cooperative’s membership area are
the basis for representation and election to office.
Members from within a district, elect fellow district
member(s) to represent them in cooperative decision-making. Officers are generally elected at annual district meetings.
7) Mixed-Both cooperative organizations and individual farmers are members.
8) One-member, one-vote system-Voting power
based solely on farmer membership in a cooperative. Each member has equal voting power, i.e., one
vote.
9) Proportional voting system-Voting power based
on member’s use of the cooperative or on the
amount of stock ownership. Typically, each member
is allocated one vote, plus additional votes based on
the amount of volume transacted with the cooperative or stock owned.
Cooperative incorporation statutes and the securities laws in many States restrict voting methods in different ways and to varying degrees. Some State
statutes restrict voting power to be exclusively onemember, one-vote, while others allow proportional
voting with various restrictions. Although these regulations restrict choices about voting methods, they represent historical and institutional preferences about
democratic governance of cooperatives.
A comparison of one-member, one-vote and proportional voting can be examined as aggregations of
individual choices or as preferences, only when confined to States that allow both methods of voting.
Furthermore, counting the incidence of voting methods only for States that allow both methods of voting
would not necessarily provide a meaningful count if
some of these States only recently revised their cooperative statutes to allow either method of voting. Even
when States have revised their regulations most cooperatives continue to use their original policies. For this
reason, States that recently revised their incorporation
statute restrictions on proportional voting were not
included in the comparison data set for table 2.
Earlier surveys of voting by cooperatives recognized, but did not consider the effect of States having
widely differing regulations on voting, when reporting
national or regional results. This report provides a special tabulation of voting methods by direct-membership
cooperatives in States that allow both methods (table 2).
Cooperative incorporation statutes in 21 States
require one-member, one-vote. Eleven States have
either recently revised their statutes to permit proportional voting, or have allowed its use under certain circumstances. (Reilly, 1996). Eighteen States have cooperative incorporation statutes that allowed either
voting method since at least the 1982 survey of State
statutes. (Baarda, 1980.)
Illinois is the only State that required cooperatives
to use proportional voting if organized on a stock basis.
In addition, its proportional voting requirement is not
related to volume of patronage, rather, a member has
one vote for every share of stock invested in the cooperative. Many cooperatives in Illinois have historically
been organized on a stock basis, and therefore onemember, one-vote was prohibited. Although the State’s
regulations on proportional voting for all stock-holding
businesses have recently been revised to allow one vote
per member or per investor, most cooperatives were
organized when the earlier rules were in effect.
11
References
Baarda, James R., State Incorporation Statutes for
Farmer Cooperatives. Washington, D.C.: USDA
ACS CIR 30, Oct. 1980.
Butler, Gillian, Designing Membership Structures For
Large Agricultural Cooperatives. Washington,
D.C.: USDA ACS RR 75, August 1988.
Craig, Jack, The Nature of Cooperation, Blackrose
Press, 1993.
Ginder, Roger and Ron E. Deiter, “Managerial Skills,
Functions, and Participants,” in David Cobia
(ed.) Cooperatives in Agriculture, New Jersey:
Prentice Hall, 1989.
Gray, Thomas W., Structuring for Member Control in
Large Cooperatives: A Case Study in Dairy.
Washington, D.C.: USDA ACS RR 72, July 1988.
Gray, Thomas W. and Gillian Butler, “Charting From
Within a Grounded Concept of Member Control.”
Journal of Agricultural Cooperation. 6.1991.
Gray, Thomas W. and Gillian Butler, Membership
Structural DesignWashington, D.C.:
USDA/RBS/CS RR 131, Nov. 1994.
Reilly, John, D., Recent Changes to State Incorporation
Statutes Used by Farmer Cooperatives,
Washington, D.C.:USDA/RBS/CS, unpublished
manuscript, 1996.
Schomisch, Thomas, and Gillian Mirowsky, Delegate
Systems, Washington, D.C.:USDA ACS unpublished manuscript, 198 1.
Ward, Clement, Vernon Schneider, Ramon Lopez. 1979.
Voting Systems in Agricultural Cooperatives.
Washington, D.C.: USDA ESCS RR 2, February
1979.
12